Walking Away From House (rental, Realtor, short sale, residence)
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Heritage, I am faced with a similar situation right now in Baltimore with two row houses that I bought as investment rental units. The intention is that once the tenants pay their rent I could make the mortgage with a little spare change left over. The thing is that someone forgot to tell me that the folks in Baltimore's inner city DO NOT like to pay rent. I have been struggling for years dragging people into court to pay their rent which often times I have to take out of my pocket just to make the mortgage payments and not to ruin my stellar credit score.
Well let's just say that the cup has overflowed and the camel's back has been broken because my job is not even permanent and I have 4 mouths to feed and another mortgage for my primary place of residence to deal with. I have tried to sell the homes but the mortgage balance is more than anyone is willing to pay for row houses in the type of neighborhoods where these houses are located. I tried to get section-8 but the section-8 tenants are taking their vouchers to get houses in the county instead of the inner city. What would you suggest that I do ... not at least consider a Short Sale? I could have easily stop paying the mortgage, but I am at least trying to do the right thing and at the same time head off a stress induced explosion of my arteries by at least asking the banks to meet me halfway on what is obviously a bad investment.
This type of financial tool has its purpose and I think that I am a prime candidate for help with this tool. I realize that my credit will take a significant hit, but if you or anyone have a better idea then I am all ears. My tax money helped to bail out these same banks so I see nothing immoral about asking them to meet me half way with a Short Sale on two investment properties under water .. do you?
The right thing is to protect your family from our corrupt govt, courts and banks to the best of your ability. In fact I need to make sure that my wife goes down and gets her passport just in case. People think this is some kind of joke like we just dont want to pay our mortgage because we want to go booze it up, but the problem is MUCH deeper.
I think I understand what the OP is saying. I also don't get why someone would not want their house after finding out its underwater. Its the same house, for the same price they agreed to pay. Nothing has changed and unless they plan on selling it very soon, I don't get why anything needs to change.
I guess I look at it similar to a car. Soon as you drive off the lot, its not worth what you paid but you still get the car and all its features until the end of its time. And people continue to put all the money into maintenance and insurance, spending thousands and thousands more over the original listing price and in the end, the car either becomes junk or is sold or traded off and we never get back the money we put into them. But you still had the car and the transporation is provides in the time being.
And people continue buying cars, several throughout their lifetimes but no one minds the money spent and lost there.
Becasue you cant rent a car for cheaper than your monthly payments. If rent was still sky high then no one would be selling their homes.
The problem with all this is the length of the loan. Who in their right mind lends someone money over the course of 3 DECADES, the banks deserve to loose their a**. A car loan is 3-5 years at worse, maybe they should make home loans a max of 6-8 years. Who the heck knows if I will have a job 20 years into the mortgage or even be ALIVE. 30 years, even 15 years is a HUGE amount of time.
That is why there are stratigic defaults, people can not stomach paying for a bad loan with their lives. Eating 3 years on a car payment is one thing, eating 30 years on a home loan is a completely other thing. 30 years is longer than old time indentured servitude contracts. It would be like banks making 100 year loans and then wondering why people default LOL.
The problem with all this is the length of the loan. Who in their right mind lends someone money over the course of 3 DECADES, the banks deserve to loose their a**. A car loan is 3-5 years at worse, maybe they should make home loans a max of 6-8 years. Who the heck knows if I will have a job 20 years into the mortgage or even be ALIVE. 30 years, even 15 years is a HUGE amount of time.
That is why there are stratigic defaults, people can not stomach paying for a bad loan with their lives. Eating 3 years on a car payment is one thing, eating 30 years on a home loan is a completely other thing. 30 years is longer than old time indentured servitude contracts. It would be like banks making 100 year loans and then wondering why people default LOL.
You clearly have no idea on what you are talking about. As a lender, why not do a 30 year loan on an asset that will most likely last 100-300 years or longer? Especially to good borrowers that have ample income and a history of meeting their obligations.
There are car loans that go 6, 7 and even 8 years now. There again vehicles last longer than that. Do you know you can get boat loans for 20+ years?
If you don't have a job 20 years in either you or the lender can sell the property. Most people have jobs their entire lives. After that they have retirement income.
You don't have to do a 30 year loan, there are shorter terms. You can also pay cash if you don't like the big bad bank. You don't have to buy at all...stay a renter.
I don't see the correlation between term length and default.
You clearly have no idea on what you are talking about. As a lender, why not do a 30 year loan on an asset that will most likely last 100-300 years or longer? Especially to good borrowers that have ample income and a history of meeting their obligations.
There are car loans that go 6, 7 and even 8 years now. There again vehicles last longer than that. Do you know you can get boat loans for 20+ years?
If you don't have a job 20 years in either you or the lender can sell the property. Most people have jobs their entire lives. After that they have retirement income.
You don't have to do a 30 year loan, there are shorter terms. You can also pay cash if you don't like the big bad bank. You don't have to buy at all...stay a renter.
I don't see the correlation between term length and default.
Thats a pretty tall assumption. Most people dont keep the same job for 30 years and if the employment gap is large enough thats all it takes to get forclosed on, even if they find a job a year later it may not be enough to pay the mortgage. The nation is changing but for some reason people think that mortgage terms should not be, well the banks are going to learn that the hard way when so few people are paying any significant taxes that the govt cant function. Your post makes ALOT of assumptions considering the new order of things post 2008.
I plan on renting for quite a while as soon as my place sells, it makes no sense to buy something unless you can have at least half down if not completely pay cash.
Thats a pretty tall assumption. Most people dont keep the same job for 30 years and if the employment gap is large enough thats all it takes to get forclosed on, even if they find a job a year later it may not be enough to pay the mortgage. The nation is changing but for some reason people think that mortgage terms should not be, well the banks are going to learn that the hard way when so few people are paying any significant taxes that the govt cant function. Your post makes ALOT of assumptions considering the new order of things post 2008.
I plan on renting for quite a while as soon as my place sells, it makes no sense to buy something unless you can have at least half down if not completely pay cash.
A shorter loan term means higher payments. A person can lose their job one year into a mortgage. How would it help them that they are on a higher payment 10 year loan?
Half down or all cash would not be the best plan if that uses up all your cash. Much better putting 20% down and keeping a stock pile of cash.
True, most people don't have the same job for 30 years, but most people don't end up with job gaps either. I have had multiple jobs in my 20 year working career (not all in the same field either). Never had a job gap though. Even if a person does end up with a gap, they should have some kind of back up plan to cover thier bills especially if they are a homeowner.
As far as making sense to own vs. rent, that is different for every person. For me I would have to be in dire straights before I would rent again. I would rather foot the interest bill and 'be my own boss' when it comes to the roof over my head.
Heritage, I am faced with a similar situation right now in Baltimore with two row houses that I bought as investment rental units. The intention is that once the tenants pay their rent I could make the mortgage with a little spare change left over. The thing is that someone forgot to tell me that the folks in Baltimore's inner city DO NOT like to pay rent. I have been struggling for years dragging people into court to pay their rent which often times I have to take out of my pocket just to make the mortgage payments and not to ruin my stellar credit score.
Well let's just say that the cup has overflowed and the camel's back has been broken because my job is not even permanent and I have 4 mouths to feed and another mortgage for my primarS
y place of residence to deal with. I have tried to sell the homes but the mortgage balance is more than anyone is willing to pay for row houses in the type of neighborhoods where these houses are located. I tried to get section-8 but the section-8 tenants are taking their vouchers to get houses in the county instead of the inner city. What would you suggest that I do ... not at least consider a Short Sale? I could have easily stop paying the mortgage, but I am at least trying to do the right thing and at the same time head off a stress induced explosion of my arteries by at least asking the banks to meet me halfway on what is obviously a bad investment.
This type of financial tool has its purpose and I think that I am a prime candidate for help with this tool. I realize that my credit will take a significant hit, but if you or anyone have a better idea then I am all ears. My tax money helped to bail out these same banks so I see nothing immoral about asking them to meet me half way with a Short Sale on two investment properties under water .. do you?
Well I commend you for trying to do the right thing and trying to make all the payments first. That is to be respected. Your situation is different than that which started the OP. The people the thread started with simply decided to buy a more expensive house and screw the banks (tax payers) on the original house.
As for your situation, I would not have purchased more than one home. Hindsight is 20/20, but I only feel comfortable buying what I can afford with cash. I would never want to be a landlord. That is just a screwing waiting to happen. I'm sorry for your situation, but at least you are one of the few who were trying to pay what you owe. Not everyone is as honorable as you.
The problem with all this is the length of the loan. Who in their right mind lends someone money over the course of 3 DECADES, the banks deserve to loose their a**. A car loan is 3-5 years at worse, maybe they should make home loans a max of 6-8 years. Who the heck knows if I will have a job 20 years into the mortgage or even be ALIVE. 30 years, even 15 years is a HUGE amount of time.
That is why there are stratigic defaults, people can not stomach paying for a bad loan with their lives. Eating 3 years on a car payment is one thing, eating 30 years on a home loan is a completely other thing. 30 years is longer than old time indentured servitude contracts. It would be like banks making 100 year loans and then wondering why people default LOL.
A car loan is predicated on payment to term.
A home loan is predicated on use of money for a rate during the term of use, with amortization at a 30 year pace.
100 year amortization loans exist in some countries. No problem. Just a way to get a deed, rather than leaseheld tenancy.
Very few people pay on a loan for 30 years.
So far, we have paid off a 20 year loan, and 5 30 year mortgage loans.
And most of the way through a 6th 30 year loan.
And no matter what the kids think, we are nowhere near 200 years old....
I feel independent, with the security of ownership, not subservient.
A car loan is predicated on payment to term.
A home loan is predicated on use of money for a rate during the term of use, with amortization at a 30 year pace.
100 year amortization loans exist in some countries. No problem. Just a way to get a deed, rather than leaseheld tenancy.
Very few people pay on a loan for 30 years.
So far, we have paid off a 20 year loan, and 5 30 year mortgage loans.
And most of the way through a 6th 30 year loan.
And no matter what the kids think, we are nowhere near 200 years old....
I feel independent, with the security of ownership, not subservient.
It makes since but you would have to double your mortgage payments to accomplish that leaving most broke for 6 years thats a pretty tall order. Unless you have an uncommonly high income so you can afford to do that without much skin off your back.
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